Inflation unlikely to raise further: BofA
Almost three quarters of respondents believe inflation is only transitory, according to a Bank of America (BofA) survey, with the percentage of respondents expecting higher inflation down 19% from May.
According to the latest Bank of America Global Fund Manager survey, which surveyed 224 fund managers with $667 billion in assets under management, a net 64% of investors were expecting higher inflation in the next 12 months, down 19% from the previous month.
Some 72% said they believed inflation was only transitory compared to 23% who thought it would be permanent.
“Investors [are] bullishly positioned for permanent growth, transitory inflation and a peaceful Fed taper via longs in commodities, cyclicals and financials,” the report said.
However, the threat of rising inflation remained the number one tail risk for respondents, joint with the threat of a taper tantrum. Over half of respondents expected the US Federal Reserve to taper its asset purchases in August/September.
Regarding positioning, BofA said investors were “significantly overweight” cyclical stocks such as the Eurozone, banks, energy and materials and were underweight defensives. There was a 39% underweight by respondents to utilities, the largest since February 2017. Technology weightings had doubled from 11% to 22% over the month.
Investors said they expected value stocks would be the asset most likely to outperform over the next 12 months followed by technology stocks.
Cash was down from 4.1% in May to 3.9% in June which BofA said was an indicator to sell global equities.
AUTHOR
Laura Dew
Recommended for you
Clime Investment Management has faced shareholder backlash around “unsatisfactory” financial results and is enacting cost reductions to return the business to profitability by Q1 2025.
Amid a growing appetite for alternatives, investment executives have shared questions advisers should consider when selecting a private markets product compared to their listed counterparts.
Chief executive Maria Lykouras is set to exit JBWere as the bank confirms it is “evolving” its operations for high-net-worth clients.
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
